Client assets and advisor numbers climbed at Raymond James in 2021, while records were set in assets under administration and assets in fee-based accounts.
Raymond James’ Private Client Group pulled in $104 billion in net new assets in the year ending Dec. 31, an 11% increase.
The firm said it ended the quarter with 8,464 financial advisors, a net increase of 231 over the prior year period and a net decrease of 18 compared to the preceding quarter. CEO Paul Reilly, on the conference call following the earnings release, said advisor retirements were the biggest reason for the decline.
“I can’t promise we’ll be able to sustain the 11% net new asset growth we achieved over the last 12 months … but given our strong retention and continued interest in all of our affiliation options, I’m optimistic we will continue delivering leading organic growth numbers,” Reilly said.
Fee shift: Reilly said a larger portion of certain client fees had been allocated to the Private Client Group starting at the beginning of the fiscal year, Oct. 1 — nearly $9 million in managed account fees. This change was a primary driver of the asset management segment’s revenues and pre-tax income declining sequentially, he said.
Assets and accounts rise: Private Client Group assets and fee-based accounts were up 8% during the quarter, but Reilly predicted growth of 5% to 6% in the current quarter, which is shorter. He said consolidated brokerage revenues of $558 million were up 6% over the prior year and 3% sequentially.
Higher expenses: Reilly said he expected expenses to rise in the current fiscal year with spending on labor, technology and business development as travel and conferences resume and as net loan growth drives higher associated bank loan loss provisions for credit losses.
Records set: Private Client Group assets under administration hit $1.2 trillion, up 23% over the quarter ending Dec. 31, 2020 and 8% over the quarter ending Sept. 30, 2021. Assets in fee-based accounts totaled almost $678 billion, up 27% over the year-earlier quarter and 8% from the previous quarter. Clients’ domestic cash sweep balances jumped to $73.5 billion, up 19% from the same quarter of 2020 and 10% from the previous quarter.
Analyst keeps hold rating: Michael Elliott of CRFA Research maintained his hold rating after the news, but did raise his 12-month price target by $8 to $111. He raised his 2022 EPS estimate by $1.08 to $7.63 and maintained his 2023 estimate at $7.30. He pointed to Private Client Group revenues that rose 26% year over year and record assets in fee-based accounts.
